Would-be Coyotes owner gets another month to not buy the Coyotes

I am so sorry! Here you all have been, waiting on tenterhooks to find out what happened with Glendale’s deal to give $200-million-plus in subsidies to the new buyer of the Phoenix Coyotes, a deal that was set to expire last night at midnight! And instead, I have been mucking around with a new site design. What, what was the denouement, you cry?

Well, okay then. Denouement postponed.

The problem, apparently, is that Greg Jamison, the intended beneficiary of all this public generosity, is still $20 million short of the $170 million purchase price that the NHL has set for the league-owned team. (Yes, that’s $170 million for a team that comes with $200 million in subsidies. No, I never get tired of noting that.) And with the NHL unwilling to lower its price, the waiting game continues.

The two big questions here, obviously, are: If Jamison’s having a hard time finding investors for a bargain-basement purchase that comes with enough public cash to finance the purchase by itself, can he possibly make the Coyotes into a viable business once he has them? And why is the NHL so set on keeping the team in Phoenix, when it could presumably get a lot more cash for its asset (not to mention TV viewers for its product) in, say, Quebec? Does Gary Bettman really not know how to declare victory and retreat?

It’s all very odd, and leaves poor Glendale in position of trying to throw public money at a team that the NHL simultaneously refuses either to abandon or to take a loss on in order to keep it in place. I’m sure there are Coyotes fans out there who would be rightfully upset to lose their team if it moved, but this is starting to feel like an abusive relationship that all involved would be better off by dissolving.

13 comments on “Would-be Coyotes owner gets another month to not buy the Coyotes

  1. Even if Jamison is able to pull off the deal, what’s the likelihood of the team surviving more than a few years? The odds on bankruptcy (again) and relocation/contraction/short sale/foreclosure have to be very, very high. If he’s having trouble coming up with the initial cash, how’s he going to absorb the inevitable losses in the next few years? Presumably he has a business plan to make the franchise profitable; you would think that’s one of the first things the other investors would demand.

    Come to think of it, maybe that IS the hangup…

  2. If the goldbrick people had any sense of irony they’d attack this in another way — with this amount of public incentives being gouged, er forked over, the city fathers would best just buy the team and run it. They then would have at least an asset to sell and a real say in how its managed.
    I know its crazy and Bettman would never agree — altho it could be the one approach that finally makes him turn tail from the desert — but it looks just as good as what’s going on.

  3. I wonder if the reason the NHL is so determined to keep the Coyotes in Phoenix is that they don’t want to derail any future arena deals.

    If a city can build a brand new, state of the art arena, and then the team can declare bankruptcy and get out of the lease less than a decade later, perhaps it would give pause to future city leaders intent on future stadium giveaways,

  4. But isn’t Quebec where the Islanders here headed? Maybe the Coyotes will end up in Seattle….

  5. “But isn’t Quebec where the Islanders here headed? Maybe the Coyotes will end up in Seattle….”

    My suspicion is that Bettman is going to drag things out long enough in the hopes that Seattle City Council builds a brand new arena. Seattle will return to the NBA and eventually at some point, the Coyotes will relocate to Seattle. As for the Islanders, Long Island and the surrounding areas have three more years to get something resolved. I think that they will remain somewhere near the Long Island area (if not Nassau County) as their television contract with MSG is valid through 2031. If Seattle City Council votes no to building a new arena, then I think that the Coyotes will move to Quebec City. Then again, Bettman might find a way to derail a potential move to Quebec City so who knows what will happen.

  6. There is still value in keeping the team in Phoenix…er I mean Glendale. Most people I talk to say the problem (financially) isn’t that hockey cannot survive in Arizona but more the location of the Arena in relation to where the fans are located. From what I understand, most of the fans (and money) are located east of Phoenix (Chandler, Tempe, Scottsdale) and with Glendale west of Phoenix it is a pain in the butt to get to weekday games. I’ve heard this from about 5 people so not necessarily a great source of info. (For the record, not stating they should build a new arena).

    The benefits to the league is having a national (US) footprint to help create value in National TV contracts. The league gets about 200Million a year from NBC…an astute analyst could say that a portion of that is for the Phoenix market. For argument sake, you could say 10Million a year (200M/ ~23 US teams). That isn’t much.

    You could also look at this from a startup/business point of view. It takes time to build a brand, following and a profitable business. How long the company (NHL) continues to invest in this product (Hockey in Arizona) is the question? Will it eventually turn a profit? I think so..but how soon and is it worth it? I would say no to the worth it question. Most owners would be willing to take a yearly loss on a team as long as the value of the teams increases more than the loss but in Phoenix-dale that hasn’t been happening which is probably why there is such a struggle to find owners. //www.forbes.com/teams/phoenix-coyotes/ Historical value numbers are down a bit to the right. They have been down since 2006….that said, Forbes tends to evaluate teams lower than what the market will pay.

    To be clear..I am not saying the team should stay down there but this is the logic for keeping the team there. It is much more than just attendance.

    My prediction:
    Phoenix to Quebec City in 2013
    Islanders to Seattle in 2016

  7. The Coyotes and the Tampa Bay Rays need to team up to finance the invention of transporter beams.

  8. Full disclosure: I’m one of those Coyotes fans who will be devastated if the team leaves.

    That said, I have to question your sources regarding Jamison’s $20 million shortfall. Every article I’ve seen report this, including the one to which you’ve linked, cites Mike Sunnucks’ article. Except Sunnucks doesn’t cite any sources of his own, and he’s been notoriously anti-Coyotes throughout this whole 3 year saga. I’m not saying Jamison is or isn’t short- just that there’s no evidence to trust Sunnucks and that anyone who actually knows what’s going on is being very tight-lipped (particularly in comparison to the previous, failed Hulsizer deal.)

    As someone actually on location, I could go on to comment about how hockey can work here in Arizona (as commenters above have touched on) and why it hasn’t so far, if anyone is interested.

  9. Hey EIlonwy, no offense but if you know the magical secret as to how hockey can work in Phoenix, then you should be charged with criminal neglect for allowing them to lose $20M annually for 16 years.

    People use to say “Oh they just need to win. They just need to make the playoffs”, well guess what, they have been. And STILL they lose money!

    Success on the ice does not translate into profitability. The Chicago Blackhawks lost money when they won the Cup a few years ago – they had to make cash calls from their parent brewing company several times in fact.

    For the team to work, they need two things: a fanbase willing to pay premium NHL prices to near-capacity annually; and their own arena. Yup, Jobing.com arena would need to be gifted to the Coyotes so they can garner revenues from non-hockey events. They can no longer be a tenant, they need to be the outright owner. An arrangement benefiting many NHL teams (much to Neil’s chagrin I’m sure).

    Their location does suck (Glendale) but other NHL cities have poor locations relative to their fanbase, like Ottawa and Carolina. Fans will show up regardless, cause that’s what fans do.

    Time for Phoenix to downgrade to the AHL, which has a much better chance of turning a profit in Glendale.

  10. Dave is right about the team needing other arena revenues to succeed, but the attendance is not nearly as important. I understand hockey is definitely behind the other 3 major leagues, but tv revenue is more important than attendance as a revenue stream.

  11. I can’t possibly believe that the non-hockey arena revenues would be worth more than the $15 million a year in cash subsidies that the new lease would get the Coyotes. Arenas just aren’t that profitable.

  12. It would be hard for Jobing.com Arena to get much more concerts, shows and events with the US Airways Center in downtown Phoenix. I’m sure Jobing.com Arena could get one or two big event there. Other than that it will be a few concerts, shows and events here and there at Jobing.com Arena.